Maryland tax-cap bill passes, but with a catch

A bill written to cap Maryland’s excise tax on boats passed the state senate unanimously Friday, but it no longer caps the tax.

It no longer has anything to do with that tax or with addressing the concerns that prompted the marine industry to call for a cap.

Senate Bill 90 is now a measure to put 0.5 percent of the money from the motor fuel tax into the Waterway Improvement Fund, which funds dredging and other projects intended to keep the state’s waters healthy, according to the Annapolis Capital Gazette.

“That’s not what I intended when I put the bill in,” Sen. John C. Astle, D-Annapolis, told the paper. “But we’ve been trying for some time to get an increase in money to the Waterway Improvement Fund, so I’ll take it and declare victory.”

Republican Rep. Ron George, who sponsored the same legislation in the House, said the boating industry and the Marine Trades Association of Maryland, which both contend the tax cap is needed to revive boat sales in Maryland, couldn’t overcome opposition from the state Department of Natural Resources.

George has convinced the office of House Speaker Michael E. Busch, D-Annapolis, to send a letter on his behalf asking Department of Natural Resources to work with the trade group before next year’s session.

Maryland’s vessel excise tax requires boat owners to pay 5 percent of the value of their boat if they buy the boat in the state or keep their boat there for more than 90 days a year.

Brokers say boat sales are lagging in Maryland because residents go to tax-free Delaware or to Virginia, where there’s a 2 percent tax and a $2,000 cap.

Maryland’s boat sales fell from $183 million in 2010 to $162 million in 2011, placing the state No. 26 in the nation. In 2008, boat sales were $248.5 million. Supporters had argued the bill would draw more boats and larger boats to the state, stimulating Maryland’s marine industry not just by increasing the sale of boats but by expanding the demand for slips, accessories and maintenance services.

Association executive director Susan Zellers told the Gazette that the cap has been a frustrating experience.

Comments

Yacht owner here… 100+. I learned about this nifty little tax the hard way. I brought my yacht to the dock behind my house in MD. It had spent most of its life cruising between the Bahamas and Maine. After 93 days my friends at the DNR sent me a six figure state use/excise tax bill. (I purchased the boat NOT in MD… see if you can guess why..)

I hired the fanciest attornies in the state and fought. I lost and had to pay the $$$. My NEW, bigger boat is now safely docked in FLA where they capped the sales/excise tax at $18,000. Guess what happened there when they did that a couple of years ago? Sales WENT UP.. yard work went up. Marine businesses were happy.

And guess what else went up? Total Tax Revenues! Why the MD folks do not get this, with a real live example just down the coast, I don’t understand. But my yacht is doing no yard work, paying no dockage and will never be in MD for more than 29 days. (the DNR has a theory that it is 30 days not 90 and I do not plan to test this one) EVER.

Shame since this is my “home port”.. but this is a loser for the marine industry and the politicians should be ashamed and the voters should dispose of any who voted against this. Maryland is a great place to cruise, but who in their right mind will be here for 91 days in their $10mm boat and get to pay a $500,000 bill for the priviledge.

I can fully sympathize and agree with the reply from “painless101″. I own homes near the water in both Maryland and Florida. My wife and I decided to declare our homestead in Florida (instead of Maryland) for several reasons, the primary of which was related to unfair tax practices in Maryland. We sold the boat that we had in Maryland when we moved to Florida and we now pay a much lower tax rate since there is no income tax in FL. Maryland should take a page out of the Florida tax laws before more boaters decide to purchase and keep their boats outside of Maryland.

A very sad fact is the “Waterway Improvement Fund” is regularly emptied to the “General Fund” and becomes a subsidy spending amount.
Senate Bill 90 is stated to be a measure to put 0.5 percent of the money from the motor fuel tax into the Waterway Improvement Fund, which funds dredging and other projects intended to keep the state’s waters healthy, but I bet no language was added to keep the Fund whole and intactfor the waterways. Our bay is getting SICKER our waterways less used and our taxes are going up !!! Go O’Malley Maryland !!

Because of the MD tax on boaters I purchased my large boat outside of MD and docked it in VA. We eventually moved out of MD to the tax friendly state of Florida. Maryland is a beautiful place to cruise but if you stay for more than 30 days they will come after you with a bill.